Uganda to Borrow 2.4tn Despite Huge Debt Burden 

Some of the funds will be used to finance the Climate Smart Agricultural Transformation Project

Kampala, Uganda | THE BLACK EXAMINER | Uganda plans to secure a substantial Shs 2.4 trillion ($650 million) from international lenders, despite mounting concerns about the nation’s debt load.

This funding is earmarked for the improvement of infrastructure, specifically road upgrades, and the implementation of the Climate Smart Agricultural Transformation Project.

The finance minister, Hon. Matia Kasaija, presented these loan requests for approval during the parliamentary session on October 10, 2023. The Committee on National Economy will thoroughly review these requests.

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The government seeks to obtain $295 million from the Islamic Development Bank and $30 million from the OPEC Fund for International Development for the National Roads Project. The government itself will contribute $22 million to this project.

The objective of this project is to enhance the country’s transportation infrastructure, lower transportation costs, and reduce travel time. It will facilitate the enhancement of the Katine-Ochero Road, linking Soroti and Kaberamaido districts, as well as a link to the ferry landing site for the Bukungu-Kaberamaido-Kagwara ferry. Additionally, the loan will support the construction of the Masindi Port Bridge and the upgrade of 68 kilometers of the Kyenjojo-Bwizi-Rwamwanja-Kahunge road, along with 37 kilometers of the Mpara-Bwizi Road.

Kasaija noted that Uganda’s debt remains sustainable, with a nominal value of public debt to GDP at 47.1 percent as of June 2023, compared to 48.4 percent in June 2022.

To finance the Uganda Climate Smart Agricultural Transformation Project, the government aims to borrow $325 million from the International Development Association of the World Bank Group, along with a grant worth $25 million. This project aims to enhance agricultural productivity by investing in efficient irrigation, agricultural mechanization, and improved farm infrastructure.

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The budget committee’s report for the financial year 2023/24 indicates that Uganda’s total public debt has reached a substantial Shs 80.7 trillion, with Shs 47.7 trillion being external debt and Shs 30 trillion being domestic debt. The International Monetary Fund (IMF) has expressed concerns about Uganda’s external debt burden and the public debt benchmark, particularly in light of potential economic shocks and risks.

The Deputy Speaker, Thomas Tayebwa, has called upon the committees reviewing these loan requests to promptly report their findings to the House.

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